THE PRESIDENT: Hello. I think it's just afternoon. I'm glad
you all got here; I thought school was cancelled today. (Laughter.)

Seven years ago when I came to Washington, our nation was
burdened with a $290-billion deficit, and our national debt had
quadrupled in 12 years. Interest rates were high and growth was low.
Vice President Gore and I set a new path of fiscal responsibility,
opening markets, investing in our people and new technologies. We
passed strong deficit reduction packages in both 1993 and in 1997, and
made tough choices in each and every budget. This put the nation on a
course of fiscal discipline, while continuing to invest in our people
and our future.

Last year, I asked the Congress to use every single dollar of
our Social Security surplus to pay down the debt, and to use the
interest savings from that debt reduction to lengthen the life of Social
Security.

Now we see the results of the last seven years: the first
back-to-back budget surpluses in 42 years; last year's surplus of $124
billion the largest in our history. The latest numbers from the
Treasury indicate the surplus for this year will be even larger. In
just the last two years, we've already paid down $140 billion of the
national debt. Through unprecedented debt buy-backs in the last few
weeks, we're able to finance the debt on the most favorable possible
terms.

Over the last two years, there have been repeated efforts to
push us off the path of fiscal discipline, with large and irresponsible
tax cuts. Because we've resisted these efforts, our debt is $1.7
trillion less this year than it was projected to be back in 1993. Now
is not the time to let up on a strategy that is plainly working.

Today I am announcing that because of the choices we have
made, the budget I will submit for 2001 accelerates the date that we
will be able to pay off our debt to 2013 -- two years earlier than we
had originally planned. We will do this by protecting Social Security
funds, and dedicating the interest savings to Social Security, allowing
us, in addition to paying off the debt, to extend the solvency of the
Social Security trust fund to 2050.

We will also be able to make Medicare secure now, through
2025. And we will be debt-free for the first time since 1835, when our
nation just had 24 states and fewer than 15 million people. Our
children and their children will not inherit the crippling burden of
interest payments that we faced seven years ago.

What does this mean for Americans in their daily lives?
Already, the debt reduction means that American families pay, on
average, $2,000 less per year on their home mortgages, $200 less on a
loan for school or for a car. This new initiative will help even more
with loans and credit card payments. Debt reduction helps everyone by
getting the government out of competition for loans, which makes
interest rates lower overall. More investment, more jobs, higher wages
for Americans result.

It makes us much more competitive in the global economy, and
less vulnerable to shocks elsewhere. It helps other nations which
really need to borrow the money to get their economies going, and, in
turn, they will be better trade partners with us.

All of this is good news. But as I have said over and over
again, there is no room for complacency. We got here by making hard
choices and sticking to a strategy that works -- that builds opportunity
and reinforces responsibility.

I remain committed to that strategy. I ask the Republican
majority in Congress to put politics aside and join me. We've got so
much work to do in the weeks ahead to make sure that we seize this
historic opportunity.

I also, before I take your questions, and because of the
remarkable weather you can see outside, would like to say just a word
about relief for the thousands of families that are struggling with
increased heating bills and cold this winter. We've been monitoring the
situation daily, and based on the most recent data it is clear that a
release of emergency funds from the Low-Income Home Energy Assistance
Program is warranted. Therefore, today I am directing the Secretary of
Health and Human Services to expedite the release of LIHEAP funds to
Alaska and states in the Northeast which have experienced the greatest
hardship. These funds will help keep more American families safe and
warm this winter, and we'll get them out there just as quickly as we
possibly can.

Q How much?

THE PRESIDENT: I don't know yet. We're working on it. We'll
put it out as quick as we know.

Q Mr. President, why isn't it right for the next President and
the next Congress to put forward such a long-term plan as you're doing
today?

THE PRESIDENT: Why isn't it right?

Q Yes, why shouldn't -- Senator Lott says it ought to be for
the next President and the next Congress to do programs like this. This
is a very long-term initiative that you're putting forward today.

THE PRESIDENT: You mean the debt relief?

Q That's exactly right.

THE PRESIDENT: Well, I think they ought to follow it. But
you've got to understand, even if we commit to this path, since every
year the Congress will meet, they'll have to recommit to it. But it
will be much easier -- what we could do is derail them. If we had
adopted, for example, the tax cut last year, we would have stopped that.

What we're doing, by taking this position, is maximizing the
choices that the next Congress and the next President will have. Except
-- on the Social Security thing, on debt relief. On Social Security,
what I propose will take Social Security from 2034 to 2050. That is
well beyond the life of most baby boomers. I would like to take it out
75 years. But I presume, based on what happened last year, that we
won't be able to get enough bipartisan agreement to do that. So there
will be plenty for the next President and the next Congress to do.

And they will have to do that, because the life expectancy is
going to go up so exponentially. And we've already gotten Medicare out
25 years -- keep in mind, Medicare was projected to go broke last year,
when I took office. Now we've got it out to 2025. I think that it is
appropriate to add the voluntary prescription drug benefit, and to take
it out a little further by taking some of the reforms that all of us
apparently agree on, based on the Medicare Commission that had heavy
involvement by Senate Republicans and Democrats. And the Finance
Committee's going to take that up. So there will be plenty for America
to do next year and the years beyond. There always will be.

Q Mr. President, what do you -- what's your read on the
results from Iowa? Were you surprised by the margins on both the
Democratic and the Republican side? Can you give us your take?

THE PRESIDENT: Well, I think the Republican race was about as
I thought it would be, and I think that the Vice President had a
terrific victory last night in Iowa, and I think all the more impressive
because he and Senator Bradley, I thought, both ran very substantive
campaigns, very idea oriented campaigns, and had that whole series of
debates, which I think served the people very well. And I think he
should be very proud of that, his strong effort. And I was very pleased
to see that. But I don't have any real analysis of what happened in the
insides of either one of the campaigns because I didn't follow it that
closely.

Q Well, you've been through this. I mean, as they go into New
Hampshire, how does it affect the dynamic there?

THE PRESIDENT: I think it's a plus, but I agree with what the
Vice President said last night, it's important not to over-read it. The
people of New Hampshire are very independent. They want to make a good
choice. They understand that to some extent the choice they make
affects the choices that the country has after the New Hampshire
primary. And I think that you'll see all the candidates there really
bearing down and trying to reach the voters, which is what they ought to
do.

Q Mr. President, are you inclined to sign or veto any possible
bill out of Congress that would grant Elian Gonzalez U.S. citizenship?
And do you think it was a good idea for the two grandmothers to come
here to meet with Congress, or are you concerned that might further
politicize the process as you --

THE PRESIDENT: Well, first, I have done my best, as all of
you know, to handle this in a non-political way and to make the
judgments for which the law provides. The judgment that the law
provides for the INS to make is whether the father can properly be
declared the guardian of the child, since the mother was, unfortunately,
killed.

And the case is now in court, and I would like to see -- at a
minimum, I would like to see this court case played out before the
Congress takes action. I think we ought to try to let the legal system
take its course.

I understand that the strong feelings that exist in this
country about the Castro government complicates this. And I know that
that little boy has some relatives in this country who feel very
strongly about that. And I guess his grandmothers, in coming up here,
were reacting to what they thought about the extent to which the case
had already been politicized.

More than anything else, I wish that somehow -- I mean, no one
can really know for sure, I suppose, what terrible and probably not
fully conscious burdens that child has already sustained because he lost
his mother and because now he's being competed for in a way that is
unusual for a six-year-old child. And I know that -- maybe it's just
because I'm not running for anything, but I just somehow wish that
whatever is best for this child could be done. And I know there are
people who genuinely disagree about that, because plainly he would have
more economic opportunity in this country. But all the evidence
indicates that his father genuinely loved him and spent a great deal of
time with him back in Cuba.

So I think that -- you know, what I have tried to do is to set
up a circumstance where the people who were in a position to know the
most and be the least influenced by whatever the political
considerations are would at least have the maximum opportunity to wind
up doing what was right for the child. I hope that somehow we can still
find a way to do that.

Q If I could follow up, for better or worse, though, politics
is a reality in this situation --

THE PRESIDENT: Yes, it is.

Q Could you possibly veto any bill that would grant Elian
Gonzalez U.S. citizenship?

THE PRESIDENT: I have not decided what to do and I wouldn't
rule that out. I just haven't decided what to do.

Let me just say for the moment, if you take it out of the
combustible, emotional nature of our relationship with Cuba and
particularly the Cuban American community in South Florida's
relationship with Cuba, and you think about the issue, one of the things
that I think we all need to think about is this could happen again. I
mean, this sort of thing could happen again because you have so many
people coming to our shores from all these different countries, and then
shifting governments, shifting policies within countries. And what we
do need is an analysis of whether we have the tools to maximize the
chance that the kids involved and the families involved will be treated
fairly, based on the merits of, particularly, the best interests of the
child.

And I think, again -- I'm happy to talk to anybody about this
and really try to think this through. I'm just trying to minimize the
politics of it, because I think if you take this one decision out of
context, it's not just Cuba and it's not just this little boy, there are
likely to be a lot of these things in the future as immigration flows
increases, upheavals increase elsewhere, and as we know more and more
about what goes on in other countries.

This is something that ought to be thought about. But in my
-- I suppose I have tended to think of this child more from a point of
view of a parent than anything else, and I wish I knew more about the
facts even than I do, because I just -- this poor kid has already lost
his mother, and whatever happens, I'm sure he's going to carry certain
burdens into his early adolescence that most of us did not carry. And
somehow, whatever happens, I just hope it turns out to be best for him.
He's a beautiful child.

Q Mr. President, in his victory statement yesterday, Governor
Bush seemed to be throwing down the gauntlet against you. He seemed to
be kicking off his major campaign against you. What do you have to say
about that, and do you have a rebuttal? Are you going to do anything
about it?

THE PRESIDENT: Well, I have, I guess, two responses. One is,
this campaign is between the candidates and the American people, and
they will evaluate all claims and charges, and they usually get it
right. That's why we're all still around here, after 224 years. They
almost always get it right. And so I'm going to leave most of that to
them.

Now, it is an unusual claim that we ought to somehow reject an
approach that has given us the longest economic expansion in history and
the lowest unemployment, welfare and crime rolls in 30 years, not to
mention the benefits of the Family and Medical Leave law and the Brady
law, which were vetoed in the previous administration. And I agree that
the tax program he's proposed might well undo a lot of that, and he can
make the claim that that's the basis on which the campaign ought to
proceed. But I don't really want to get into an argument with him. He
ought to -- I think that ought to be something between him and the other
candidates and the American people.

But I do think it's an unusual thing to say that what we
really ought to do is change what has given us an unprecedented level
not just of economic prosperity, but of social progress and social
cohesion, restored credibility of government, proved that ideas really
can matter to move the people forward. I think that that's a pretty
hard argument to make.

Q Mr. President, what's your projected surplus for the new
budget, and doesn't that allow room for at least a modest tax cut?

THE PRESIDENT: Well, yes. First of all, I'm not -- you will
see -- I think the Congressional Budget Office, I believe, when they're
going to propose what they think, I think they will show you what the
difficulty here is, because my understanding is, they're going to give
you options. They will show you -- that is, they'll show you -- like
every projected surplus, it depends on what you think the so-called
baseline is.

We believe that there has been greater growth, and there will
be a larger surplus than we thought. But we believe -- and I intend to
propose, as I did last time, a set of tax cuts that I think are targeted
to the middle class, targeted to sustain our economic growth, targeted
to help lower-income people and areas move into the middle class, that
will keep America's economic expansion going.

But I think the most important thing -- I will say again, the
most important thing is to keep our fiscal discipline -- to keep paying
down the debt, to get the country out of debt, to keep the interest
rates down. Keep in mind, this is saving the average family $2,000 a
year on home mortgage costs. We're -- next month, we'll have the
longest economic expansion in history, and long-term interest rates are
lower now than they were in the bad economy of 1991 -- I mean, 1992.
They're lower.

So, yes we can have tax cuts. And yes, every year, and
including next year, when I'm not here, and the years ahead, we can
evaluate what the situation is. But I do not believe we should have
very big tax cuts that will explode in the second five years of a
10-year period, and that ignore what the real investment needs of the
country will be.

And that's what I mean by this so-called baseline. You know,
to use the '97 baseline and spending caps, when they were totally
shredded last year, as a basis for estimating how you should spend
everything else on a tax cut, means you're going to get back in deficit
problems -- just for example.

So, yes, we can have a tax cut. It ought to be modest; it
ought to be targeted; it ought to be in the context of fiscal
discipline. It ought not to explode in the second five years in a much
bigger trajectory than it takes in the first five years.

And again I say -- one of you mentioned about decisions that
could be made in the years ahead -- you can always make those decisions
-- if things keep getting better, then you can do more. But you should
always do it with an eye, in my judgment, toward conservative economic
policies, and toward always understanding that those things are easy to
do, but they're difficult to undo when times get tough.

Yes?

Q Mr. President, do you now have reason to believe that the
Pakistani government may have been involved in that airplane hijacking?

THE PRESIDENT: No, we don't. We do not, no. I guess the
simplest thing I can tell you is that we do not have evidence that the
Pakistani government was in any way involved in that hijacking; we
don't.

Q Mr. President, on the State of the Union, we know how pumped
up you get for the State of the Union, and I was wondering, considering
that this is your last one, whether there's also a sense of bittersweet,
that it's a bittersweet moment, too.

THE PRESIDENT: No, it's not bittersweet, it's nostalgic. One
of the wonderful Navy stewards who works for me said this morning, he
said, I can't believe we've been doing this for seven years. And the
time flies when it's a busy time, and you're absorbed -- excuse me --
absorbed in what you're doing.

I don't feel bittersweet; I do feel some nostalgia. And I
think it's something I'm very much trying to fight off, because I think
the important thing is to keep the attention of the country focused on
the future, and to keep my attention and the attention of the
administration focused on the future, and the energy level very high.
So I am working with that in mind, and I've worked very hard on the
speech and I'm still working on it.

Q Mr. President, you have a long list of things that you'd
like to do. You've been rolling them out for the last couple weeks.
There are things that weren't done last year. Realistically, what are
the chances of any real bipartisan agreements with the Republican
Congress?

THE PRESIDENT: I think that we have some significant chance
of getting some of the substantive issues through -- the patients' bill
of rights, the minimum wage, the gun reforms, the Brady background
checks at the gun shows. I think that there is a better than 50-50
chance that a lot of the investments I have recommended will eventually
prevail. And I am immensely hopeful about the New Markets Initiative,
which is more than twice as big in this budget as it was last time,
largely because there is a lot of bipartisan support for it, beginning
with the Speaker of the House. So I'm very, very hopeful.

You know, there's a part of that that has a special initiative
for the Mississippi Delta I believe Senator Lott will support. So I'm
hopeful. I'm going to do everything I can to get as much done as I can
for the American people and I'm quite hopeful.

Q Mr. President, we think we know how the Vice President
feels, but what's your pick for the Super Bowl and why? (Laughter.)

THE PRESIDENT: He can say and get in no trouble, can't he,
because he's from Tennessee. I'm not going to pick one. But I'll tell
you this -- I've followed it this year very closely. There were two
great games last Sunday. And what I thought was going to happen two
weeks ago I'm no longer so sure will.

Q Can you say what?

THE PRESIDENT: I don't think you can tell which one of them
will win. You've got one that's a very powerful defensive team,
Tennessee, with a capacity for real offense. And then you've got the
most powerful offensive team playing against them, that was stymied last
Sunday and played better defense than I thought they could. So I don't
think you can predict which one of them is going to win this race.

Q Will you send a play to one of the coaches? (Laughter.)

THE PRESIDENT: Would I what?

Q Send a play to one of the coaches?

THE PRESIDENT: No, I think they're perfectly capable of doing
that without me. That's kind of like this campaign -- you all want to
get me involved in it, but I think the Vice President, Senator Bradley,
Governor Bush and Senator McCain, they can all do this without me.
They're doing fine.

Q Is your wife going to win?

THE PRESIDENT: I think so. I think she's done a good job
with this and she's getting into it. I certainly hope she does. I
think it will be a good thing for New York and a good thing for our
country.

Q Mr. President, in regards to the Colombian aid package, are
you worried at all about sending arms down to a country who is now in a
civil war and there's no real guarantee about who will be in power even
in the next three, four years?

THE PRESIDENT: Well, I wouldn't go that far. I think, for
one thing, we want to try to preserve and strengthen democracy in
Colombia. It's a very old democracy that's under the greatest stress
perhaps in its history. And there's always a risk when you go out on a
limb to try to save a neighbor and help people to help themselves that
it won't work.

But I think that -- I believe the risks and the investment is
something that we ought to do. And, again, I believe that there will be
significant bipartisan support here. I'd be surprised if we don't have
large numbers of Republicans and Democrats supporting this. And I think
we're going into this with our eyes wide open.

One of the things that we have to do is to try to help them
gain some measure of control over their own country again. And if you
look at Colombia, in the sort of the intersection of the
narco-traffickers and the political rebels, you see a picture of what
you might see much more of in the 21st century world, with sort of the
enemies of nation states forming networks of support across national
borders and across otherwise discrete interests, like narco-traffickers,
organized criminals and political terrorists, weapons dealers.

So this will be an interesting test run for what I predict to
you not only our nation, but others in our position will have to face
over the next two decades. And it is something, again, I'm going to
work very hard to build a bipartisan consensus on this and take this out
of politics, because I believe that this is not only something we should
do for our friend and neighbor in the country that is either the
production or transit point for about 80 percent of the cocaine that
gets dumped in this country; but also, if you will, a test run for the
kind of challenges that my successors and our people will face in the
years ahead.

Thank you.

Q Did you miss being in Iowa? I'll bet you did.

THE PRESIDENT: A little bit. I did. I love it there.
They've been good to me. But I was interested in it. It's interesting
to me to watch it unfold and watch how the decisions they make -- which
is why I don't want you guys to get me into it. This is will be their
campaigns and they should make the decisions. And we should trust the
people -- they'll get it right. They always do.